Matters:

The company officially unveiled its new model, the P7+. The P7+ is a high-end pure electric sedan under 0.3 million launched by the company. The pre-sale price of the new car will be announced and pre-sale will begin during the Paris Motor Show on October 14, and will be launched and delivered in early November.

Ping An's point of view:

P7+ has a rich P7 family map, and its product strength focuses on large spaces and advanced smart driving. The P7 is a very important model in the company's development history. It was first launched in 2020. It is the first NEV model to become a hit in the domestic NEV sector. After the launch of the P7+, the company's P7 family map has been enriched. Two models will be on sale. Among them, the P7+ focuses on home comfort and emphasizes large space, while the P7i is positioned for personalized sports, and the two models complement each other. The P7+ product power focuses on two major advantages: one is large space and comfort, and the other is the company's advanced intelligent driving solution with a new generation of lidar removal as standard.

All P7+ models are equipped with the company's next-generation advanced smart driving solutions as standard, and there is no additional charge for the smart driving package. The P7+ first launched the company's next-generation intelligent driving solution with lidar. It is estimated that its complete hardware cost will be reduced by about half compared to the current version with lidar. The company's previous smart driving solutions were divided into Pro version (achieving high-speed NOA function) and Max version (achieving high speed+urban NOA), and the smart driving plan on the P7+ was completely unified. That is, all P7+ models will be equipped with advanced smart driving functions as standard, ready to be used when delivered, and not limited to cities, roads, and road conditions.

P7+ emphasizes large space and comfort, comes standard with multiple comfort configurations, and focuses on home users. The space size is one of the important product strengths of the P7+. It has a luxury executive class body size, a wheelbase of 3 meters, and a length of more than 5 meters. Officially, it is claimed that it has “C-class size and D-class space”. In terms of comfort, the P7+ comes standard with a number of comfort features, such as luxury soft materials as standard, electric adjustment of the rear seats, ventilation, heating, and massage functions for the front and rear seats, and 20 high-fidelity HIFI speakers as standard.

After smart driving becomes “end-to-end”, the importance of training data will increase, and the distribution of smart driving levels will become more obvious.

We judge that the decisive victory of smart driving in the future depends largely on training mileage data. Currently, Huawei, Ideal, and NIO have about 0.3 million high-end smart driving models. The company temporarily lags behind in terms of ownership due to the low sales volume previously, and is expected to own around 0.2 million units. However, we have determined that the number of smart driving cars among leading players will increase rapidly. For example, Huawei expects to have 0.5 million smart driving models by the end of 24, and is expected to exceed 1 million by the end of 25. The training mileage gap may further widen, and the result is that the distribution of smart driving tiers will become more obvious.

M03 helped the company get out of the sales situation, but P7+ is the key for the company to reverse the difficult situation. The success of the M03 helped the company get out of the sales situation, but it has not helped to strengthen Xiaopeng Motor's smart driving label, because the M03 model version currently being delivered is not equipped with Xiaopeng Motor's advanced smart driving system. Currently, Xiaopeng Motor's vehicle fleet that supports advanced smart driving solutions may lag behind competitors such as Huawei, NIO, and Ideal. If equipped with the AI Hawkeye Vision Smart Driving Solution P7+ and subsequent M03 Max versions (equipped with AI Hawkeye Vision Smart Driving Solution), it will further strengthen Xiaopeng Motor's “smart driving” label and facilitate subsequent iterations of end-to-end smart driving solutions.

Profit forecast and investment advice: Combined with the company's delivery volume for the first three quarters and the upward pace of M03 and P7+, we adjusted the company's revenue forecast for 2024-2026 to 42.9 billion/70.1 billion/95 billion yuan (the original revenue forecast was 41.1 billion/62 billion/94.4 billion yuan), corresponding to the 2024-2026 net profit forecast of -6.2 billion/-2 billion/, respectively +0.9 billion yuan (original net profit forecast was -6.3 billion/-2.9 billion/+0.4 billion yuan). The AI Hawkeye Vision smart driving solution brought a cost advantage to the P7+ after it was launched. We believe that the P7+ is expected to become the company's next superior model and maintain the company's “recommended” rating.

Risk warning: 1) Orders fall short of expectations after the launch of the P7+; 2) If the company's smart driving model sales are still unable to increase, the company may gradually lag behind in future intelligent driving competition; 3) the improvement in gross margin falls short of expectations; 4) The company will still be in a state of loss in the short term, and the company's fundamentals may deteriorate.